British Perspectives

A Socialist Party congress 2012 document

This document was first drafted in January 2012 by the Socialist Party executive committee; subsequently some amendments were incorporated during a discussion at the party's congress on 10-12 March 2012.

1. The dominant feature of the situation in Britain in the last year has been the re-emergence of the working class as the most decisive force in society, characterised by the three great events of 26 March, 30 June and 30 November.

This came after a period of relative social stability and arises directly from the devastating economic crisis of world capitalism that began in 2007-08.

The general resistance to the austerity measures of the coalition government is summed up by the colossal pension struggle.

2. At the time of writing - February 2012 - the outcome of this battle is in the balance. By the time of our conference this may still be the case.

The pusillanimous right-wing trade union leaders - led by Prentis and Barber - wish to abandon the struggle without any real concessions from the government.

The same demand to work harder and longer but with less reward remains as a central feature of the government's proposals to the unions.

Yet this is perfectly acceptable to these union leaders who perceive the strikes and demonstrations on this issue as a "damage limitation exercise".

From the outset, the strikes and demonstrations were merely 'for the record' - to let off steam - and not a serious attempt to force the government to retreat.

Fortunately, the left unions - the PCS, NUT, UCU - remain in the frame and are prepared to do battle.

The magnificent conference organised by PCS Left Unity at the beginning of the year did the job in mobilising the resistance from below to the sell-out of the right-wing trade union leaders.

3. There remains the prospect of another day of action by these three unions and others with further action after this planned.

Moreover, the pension battle could link up with other social struggles on the cuts which could yet inflict a defeat on the government.

It is quite clear that the coming year of 2012 will be just as convulsive as last year. The economic and social situation, with the most savage cuts seen for generations, virtually guarantees this.

This, in turn, arises from the most serious crisis for 80 years - some argue 'ever' - confronting British capitalism.

4. We have a special document on the world produced for the recent IEC of the CWI, which must be taken in conjunction with this document.

Set out is our analysis of the crisis of world capitalism, which in the next period could face the long expected 'double-dip' recession, at least in Europe, arising from the ongoing eurozone crisis, with the prospect of defaults by a number of countries on the 'periphery': Greece, Portugal and Ireland.

The inevitable economic contraction which will arise from this will seriously impact on the British economy.

This will result in a further 'death spiral', reflected in a plunging economy and rising unemployment, resulting in a further embittered mood with class polarisation and social turmoil.

5. George Osborne, the Chancellor, promised at the beginning of 2011 that an economic revival was underway. 'Grandiose' growth of 1.7% - pathetic in itself - was expected.

The reality is a contraction of 0.2% in the last quarter of 2011! Mervyn King, the Governor of the Bank of England, promised a future which would be "arduous, long and uneven".

This and other 'undiplomatic' revelations by him have brought criticisms down on his head from the coalition and its supporters.

This is a case of shooting the messenger because the capitalists do not like the message. He has also pointed out that the most likely economic scenario is for continued economic stagnation, so that by 2015 the British economy will only be at the level of 2002, meaning a lost decade.

The recent figures mean that, in effect, the British economy has been flatlining since the autumn of 2010. Therefore, talk of any 'recovery' is bogus.

Four years into the crisis - which has lasted longer than the depression of the 1930s - output in Britain is at least 4% below the level immediately before the crisis and, because of the devaluation of the pound, some capitalist economists put it at least 20% below pre-crisis levels.

6. Moreover, despite all the pain arising from Osborne's cuts, the total public-sector debt (excluding the impact of the 2008 banking bailouts) rose to over £1 trillion in December, 64.2% of GDP, up from 59.4% a year ago.

This means that the coalition's famous 'plan A' - which we dubbed "plan pie in the sky" - has totally failed.

But their solution is to inflict more pain. Truly, Einstein's famous dictum that the definition of insanity is to repeat the same actions again and again expecting a different outcome is lost on Osborne.

The Guardian commented pointedly: "George Osborne must already be girding himself to be the chancellor who ushered in a thirties style, double-dip recession."

7. This means that unemployment will climb remorselessly to the 3 million mark and beyond with the creation of a pool of long-term unemployed labour with all that this means in social dislocation and barbarism.

This, in turn, is a product of the atrophy of the British ruling class - symbolised in the present Cabinet - with its reliance on finance capital at the expense of a productive base.

The chief agent of this policy, Margaret Thatcher, presided over manufacturing industry producing almost 30% of national income and employing 6.8 million people in 1980.

By the time that the present government came to power its share of national income had fallen to just over 11% of the economy with a workforce of only 2.5 million! The capitalists can comfort themselves with the fact that British manufacturing industry is still 15th in the world in terms of production but faced with the devastating 'headwinds' of the world economy, this will be of little comfort.

8. The contrast with German capitalism, which has maintained an industrial base - although even there it has contracted - could not be starker.

German exports continue to dominate Europe and China. British exports were not enough last year to shrink the trade gap, which widened by £700 million to £8.6 billion as exports to Europe fell, while conversely imports to Britain rose.

The government and the manufacturing bosses were looking for a quick recovery, but "our main markets are struggling...

"It's imperative that exporters look to new, faster growing markets if they are to play their part." [Ernst & Young.] Osborne's famous "march of the makers"- the revival of manufacturing industry - is an illusion.

A recent report showed that the UK's share of global exports has declined sharply from 5.3% in 2000 to 4.1% in 2010. During the same period, Germany's share increased from 8.9% to 9%.

9. Osborne revels in the fact that international investors are still buying record amounts of UK government bonds.

This is allegedly because of his policies of 'sound finance'. The smug posture of David Cameron and Osborne shows just how short-sighted these modern representatives of British capitalism are.

One of the reasons why gilts are still being bought is because Britain, through the Bank of England, has resorted to 'quantitative easing'.

This largess which the banks snapped up is largely because of the insecurity and the lack of stability of any other currency.

It is the 'least bad option' for the bond traders. It does not, however, in any way vindicate Osborne, who does not have in his heart the interests of the majority.

The City of London cannot offer a lifeline to the British people, accounting as it does for just 9% of GDP.

10. And no salvation can be expected from the other aspect of the service sector, retail. Despite a spurt over Christmas, it is on its knees.

Retail remains a vital arena for the development of capitalism in the modern era. In the heyday of capitalism - the 19th-century - consumption accounted for roughly one third of total income with a high percentage of the surplus extracted from the working class ploughed back into production.

In today's world, the fractions are reversed, particularly for Anglo Saxon capitalism - the USA and Britain - with two thirds now accounting for consumption.

Therefore, the capitalists are frantically maintaining the 'shop till you drop' culture. Indeed, George Bush junior, following al-Qaeda's attack on the twin towers in 2001, made a special TV appeal for people to "answer the terrorists by going out to shop"! Today, the chief economic commentator of the Independent, Hamish McRae, echoes the same refrain: "When the going gets tough, the tough get... shopping."

11. However, it will soon be difficult for shoppers to find traditional outlets to shop in, such is the rate of collapse in the high street.

Not just the street corner shop but stores like the La Senza chain and others have been taken over while sales at Argos and HMV have dropped.

Even the mighty Tesco - in the sale of food virtually a state within a state - suffered its worst Christmas in decades, triggering a crisis and the promise of reorganisation.

Only the food outlets catering for the better off - like Waitrose - prospered, but at a reduced rate.

12. This has had a devastating effect on job prospects. There has, for instance, been a huge reduction in the food and drinks industry through automation, which has cut the 400,000 strong workforce by 22% since 2008.

Asda estimates that consumers have £13 a week less than they did a year ago and this is destined to fall even more as the economy goes into freefall.

Fruit machines, betting shops and pawnbrokers are the only flourishing outlets. They are joined by a pernicious newcomer, the so-called 'payday lenders' who have grown as the economy has got worse and working people struggle with debts.

Denied credit from 'risk averse' banks, they are driven to take out loans at exorbitant rates.

13. The overarching reason for this is the impoverishment of big sections of the working class. After inflation, "wages have endured their longest period of stagnation since the 1920s" [Mervyn King].

At the same time, the government is relentless in its attacks on the working class and the poor. This impoverishment is not just economic but affects all working and many of the middle class in two respects.

Firstly, the ConDem Government's claim to be 'the greenest government ever' looks sick when the facts and their policies are examined.

Despite the recession, greenhouse gases are rising again and the situation will only get worse with the reduction in support for solar panels and cuts in grants to many of the environmental agencies.

In addition, the relaxation of planning controls in the name of so-called localism will mean that many more communities will be faced with unwanted development.

Secondly, cuts in council services and in Arts Council funding will mean that, increasingly, cultural and sporting activities will be restricted to those that can afford to pay.

Already we are witnessing cutbacks in library hours or even complete closure, increased charges for public sports facilities and cuts in museum provision.

14. The Economist produced an article last year referring to the lucrative nature of 'micro-loans'. Many more people living on benefits will be pushed into the grubby hands of loan sharks if the range of benefits and loans disappear through the proposed abolition of the Social Fund in April 2013.

This process was started in the 1980s by the replacement of discretionary grants with loans and these attacks are laying the ground for their abolition.

The government's intention is to give responsibility to already cash-strapped local authorities with, scandalously, no minimum legal requirement of provision.

We are totally opposed to these attacks and will push for a national campaign to defend this vital public service.

15. The government is prepared to sell off nationalised assets - which the state was forced to take over as the result of the crisis - moreover at knockdown prices.

Look at Northern Rock, which we long ago predicted, would be handed over to the private sector once the state put it back on its feet.

It has now been handed over to Richard Branson's Virgin Money, backed by American and Abu Dhabi capital.

It is a major scandal that he has been able to take over this bank for £747 million, a full £650 million less than the £1.4 billion the government paid out in 2008 to rescue it.

This even moved Tory MP Mark Field to complain: "Not only will Virgin not take on board the bad bank as part of this structure, but having put a cash injection of £1.4 billion in four years ago, we're now just receiving £747 million."

The Labour front bench greeted this scandalous daylight robbery of public assets with a squeak!

16. Osborne and the press can complain that the banks are refusing to lend to small businesses. Yet nationalised banks like Northern Rock, RBS and Lloyds Banking Group could have become the basis of a state bank, as even Samuel Brittan of the Financial Times has suggested.

With the banking sector in general paralysed through a credit crunch, the supply of financial help to small businesses, the provision of capital funds, for rebuilding homes and schools for instance, would-be possible.

While this would not in itself solve all the problems - we would prefer a state and socialist generated programme of useful public-works - it could help to break the present situation of zombie banks and a zombie economy.